This course provides a nontechnical, in-depth treatment of recent fintech developments for those aiming to work in finance. We will focus on three widely discussed fintech topics: blockchain and cryptocurrencies; crowdfunding and P2P lending; and high-frequency trading. Specifically, we will learn what those technologies are, stylized facts on how they are used in practice, and the pros and the cons of applying those technologies to financial markets. Other timely topics will be examined, which in recent years included NFTs, fraud by crypto exchanges, and the GameStop saga. Our discussions will be grounded in recent empirical findings and theories from economic literature and will focus on the main regulatory problems that arise due to the technologies. Students may be asked to complete readings prior to class and will be expected to participate in class discussions.
Fintech is among the most discussed topics within the finance industry, with high expectations of its contribution to industry productivity, profitability, and benefit for society. This course will be especially useful for managers or those aiming for management positions in finance, for which the grasp of fundamental fintech concepts and economic tradeoffs would be helpful.
Key outcomes. By the end of the course, students will be able to
In completing this course, a student will be able to…
- Define “blockchain” and describe how the technology might be applied to financial markets
- Provide potential explanations for the stylized facts on crowdfunding and P2P lending
- Discuss the pros and the cons of each fintech compared to preexisting alternatives
- Explain the main regulatory problems associated with each fintech
- State the main empirical findings on high frequency trading, crowdfunding and P2P lending
- Describe how fintech firms may have distorted incentives, and what risks arise because of them
Other outcomes: The course will also help develop skills in the following areas.
Examine specific fintech industries and firm, and analysis its market and medium-term prospects
Use statistics about an industry and a firm to justify one’s conclusions about their likelihood to succeed
Interpersonal Communication Skills
Research and present findings as a team, participate in discussion of lecture topics, ask questions during other students’ presentations
Management Knowledge and Skills
Learn about incentives in fintech and risks that arise due to misaligned incentives between fintech entrepreneurs, investors, and consumers
Cultural Sensitivity and Diversity
Show respect for one another as classmates, students and adults in all aspects of the class.
Ethics and Social Responsibility
Discuss lapses in ethics among fintech entrepreneurs and the aftermath
Grading will be based on the total score out of 100, in line with CEU’s standard grading guidelines
Team final report
Research Assignment and Reports
**Note: All assignments should be submitted anonymously (i.e., only include team names)
Team Assignment: Students may form groups of up to three. Each team chooses a country and a fintech industry, summarize the basic market structure (e.g., major firms, revenues, investment) of the industry, the services provided by the fintech, target clientele of the industry, and lists 3-5 questions one would need to answer to evaluate the industry’s long-term prospect. (2-3 pages)
Assignment Referee Report: Each team will anonymously be given another team’s assignment to evaluate. In the resulting referee report, the evaluating team will access the depth and the breadth of the assignment’s research and the quality of the questions in the assignment. In particular, the referee report must include specific suggestions, e.g., additional (or more precise) questions, possible data sources, potential problems/issues the assignment ignores, etc. (1-2 pages)
Team Presentation: Each team presents a research report, which may build upon the team’s assignment. In the presentation, the team chooses a fintech firm and explains (i) how the firm’s technology operates, (ii) the firm’s target market, and (iii) the team’s assessment of the firm’s long-term success. The presentation must comment on the regulations, the pros and the cons of the firm’s fintech and the competition faced by the firm. Each presentation will be 15 minutes plus 5 minutes for questions. Each member must speak for at least 3 minutes. (8-12 slides)
Presentation Review: Each student fills out a short form for each presentation. In the form, students will state the most important question they asked or would have asked, and comment on the presentation style, any new content that may improve the team’s final submission and the best aspects of the presentation. Replies should be reasonably thought-out for full grades. (1 page)
Team Final Submission: Following the presentations, each team will submit an updated version of their slide deck that incorporates the feedback from the presentation reviews, and questions and comments during the presentation. (10-15 slides)